Tesla Pressured to Deliver Amid Questions Over Batteries, Bitcoin, China

• Analysts expect slip in US EV-maker’s second-quarter results

• Critical launch of self-produced battery has suffered series of setbacks

Tesla Inc has weathered the pandemic and supply chain crisis better than many of its rivals, achieving record deliveries last quarter – but Chief Executive Elon Musk now faces pressure to deliver on breakthrough batteries and new factories and models, which are late.

Those questions, demand in China and the financial effect of a Bitcoin sell-off will be high on investors’ minds when the electric vehicle company publishes its results on Monday.

Last September, Musk announced an ambitious plan to produce its own battery cells with a new design and manufacturing process.

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The larger, simpler-to-make batteries, in theory would have a higher energy density and would extend the ranges of current vehicles and let Tesla offer a $25,000 car in three years, sharpening its technology edge as rivals flood the market with EVs.

But Musk last month pushed back the debut of the 4680s by cancelling the longest-range Model S Plaid+, which he had said would use the cells, sparking concern. He has said 4680s would go into volume production next year and would be used in the Model Y from the Texas factory under construction.

Now, Tesla aims to produce vehicles with 4680 batteries starting with small volumes this year in as-yet-unfinalised models, sources told Reuters.

PROTOTYPE VEHICLES

It’s claimed Tesla will initially use batteries made at Tesla’s pilot production line in California, adding that they are being tested in prototype vehicles.

Tesla is also closely working with Panasonic to develop 4680 cells. And LG, another Tesla supplier, is working to produce 4680 battery cells for Tesla by 2023, Reuters reported earlier.

But it is not clear when Tesla will be able to mass-produce the new batteries in Texas and Berlin, and if it will be able to achieve all of the ambitious goals for batteries, industry officials said.

“It has required an immense amount of engineering to take Maxwell’s proof-of-concept to high-quality, volume production and we’re still not quite done,” Musk said, referring to its dry battery electrode manufacturing process it is developing after acquiring Maxwell.

BITCOIN INVESTMENTS

While rivals with larger production have regularly paused production over supply problems, Tesla has largely kept factories moving. But it has cut some features and raised car prices, including a $4,000 hike of the long-range Model Y to $53,990 from April to late July.

The move came with Tesla bracing itself for a hit from its bitcoin investments and falling sales of environmental credits to other carmakers, income sources that the company relies on to post quarterly profits.

“Tesla adapts very quickly to what they need,” said investor Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management.

SALES SLUMP

A rollercoaster ride in China raised questions of political and competitive challenges in Tesla’s second-largest market.

Tesla sales in China slumped in April amid negative publicity from consumer complaints, quality issues and regulatory pressure. Its sales rebounded in May and June, as Tesla launched quarter-end promotion campaign like loan offers, according to advertisements at showrooms. The automaker also this month introduced a cheaper version of the Model Y in China.

“China is the linchpin to the bull thesis,” Tesla bull and Wedbush Securities analyst Daniel Ives said. “You need to see a ramp in the second half of the year,” he said.